Mahender Kumar Khandelwal the resolution professional overseeing the sale of the bankrupt firm, Bhushan Power has issued a Letter of Intent (LoT) in favour of JSW Steel, moving the resolution process a step closer to completion, reports Economic Times.
“JSW has been issued the LoI. The resolution professional will file the matter before NCLT for its approval on Wednesday,” said a senior industry executive to ET.
As per the resolution plan, JSW Steel, India’s biggest maker of alloy, will make an upfront payment of Rs 19,300 crore to financial creditors of Bhushan Power & Steel. Thus lenders will take on a significant 58 per cent haircut as they are owed more than Rs 46,000 crores.
Also, operational creditors will be paid Rs 350 crore, against their claims of Rs 621 crore. JSW Steel’s bid was larger than that of Tata Steel's Rs 17,000-crore offer.
“However, JSW Steel can hope to bag Bhushan Power and Steel only after its resolution plan is approved by the NCLT. It also has to contend with some more litigation before clinching the deal since promoter Sanjay Singal has also approached the court,” a source added.
Bhushan Power & Steel was part of the first 12 large corporate accounts put up for insolvency resolution by the Reserve Bank of India in June 2017.
Though initially marred with technical issues, Insolvency and Bankruptcy Code, 2016 (IBC), in time it provided the Indian banking system with a comprehensive solution to recover their dues from wilful defaulters.
Secretary to the Union Corporate Affairs Ministry, Injeti Srinivas, recently stated that the IBC has helped to, directly and indirectly, address over Rs 3 lakh crore worth of distressed assets.